C&W wins U.K. health services contract lost by EDS

Cable & Wireless has been tapped to manage the agency's e-mail and directory system

The U.K. National Health Service (NHS) today awarded Cable & Wireless PLC a retendered contract to manage its e-mail and directory system.

The original 10-year, $168 million e-mail contract was awarded to Electronic Data Systems Corp. in 2002, but the NHS pulled out of it in March, complaining of unacceptable delays and other concerns related to the project.

EDS soon sued for compensation and costs, saying that it was committed to the program and was in line with its contractual obligations. The NHS said that the dispute has now been settled "amicably" and that EDS will continue to manage the system until the hand-over to C&W.

Terms of the settlement weren't disclosed, and the NHS said it would have no further comment.

The lost contract, which is part of a massive plan to modernize the U.K.'s ailing health system, came as a setback for EDS, which has seen its public-sector business slide. Late last year, the company was passed over for a $5.56 billion IT outsourcing contract with the U.K.'s Inland Revenue. It also missed out on other major NHS National Programme for IT contracts, including a lucrative, multiyear contract to provide patient-care records.

Plano, Texas-based EDS originally won the contract to provide e-mail to 1.2 million NHS staffers, although only 62,000 people are currently using the system the company began installing. At the time EDS won the project, the NHS had some 7,000 different e-mail services, and only half of the NHS's staff had an e-mail address.

Much of the retendered pact will be to support the system that has already been put in place by EDS, and it is estimated to be worth less than the original contract as the health service looks to slash costs.

Copyright © 2004 IDG Communications, Inc.

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